Fixed Income
Ukrainian sovereign yields continued to return to more comfortable levels last week, with benchmark Ukraine-23 notes moving firmly higher by 2.8% to 89.2/90.2 (9.2%/9.0%). For the time being, the yields are still not low enough for a new Eurobond issue, although in an environment of buoyant external sentiments, an issue prior to year-end cannot totally be ruled out. Meanwhile, the Ukrainian government continues to rely on so-called “internal” sources of cash, which essentially involve transferring funds from wholly-owned state banks to the Finance Ministry. The government raised UAH 1.13bn at its regular bond auction on Tuesday (Oct 15) as the state banks accepted yields of 14.3% for 7-year UAH-denominated bonds. MinFin also said it plans to renew sales of domestic retail bonds, issuing USD 200mn of USD-denominated bonds and UAH 1.0mn of UAH-denominated bonds. Terms and other details regarding retail bonds were not disclosed.
